The Labor Department’s August jobs report comes on the heels of early and midsummer’s
impressive job market numbers. In early summer, normal life had begun to resume for much of
the country, driven by low COVID case numbers and rising vaccinations. The Delta variant has
upended much of this, and its impacts on the job market are just being seen for the first time this
month. August saw only tepid job growth, but there were signs of continued progress, including
a drop in the unemployment rate and continued wage growth.
Following several strong months of job gains, August’s employment increase of 235,000 jobs
was a disappointment and much lower than what was predicted by economists. Last month’s
jobs gain was revised upwards to 1.1 million, putting August’s job growth at just over one-fifth of
July’s, the lowest since January. Now nearly a year and a half into the recovery, the U.S.
economy is still 5.3 million jobs short of February 2020’s employment level.
The COVID-19 Delta variant has caused infections to surge across the country, interrupting the
return to normal life. As a result, consumers are more hesitant and some businesses have put
the brakes on hiring. However, some bright spots do stand out, including the drop in the
unemployment rate to a new pandemic low of 5.2%.
Employment in the hard-hit Leisure and Hospitality sector stayed flat since last month, but
average wages—both in the sector and across all industries—continued to increase. Despite
the large number of unemployed workers, an even larger number of job openings indicates the
labor shortage may be hindering the recovery. Several demographic groups, including
teenagers, saw rises in their unemployment rates.
The total number of unemployed individuals and the number of permanent job losses both fell in
August. At the same time, the number of temporary layoffs changed little from July. The number
of short-term unemployed workers and the number of workers unemployed for 15 weeks and
over—including the long-term unemployed who have been unemployed for 27 weeks for
more—fell while the number unemployed for 5-14 weeks increased. Median unemployment
duration dropped from 15.2 to 14.7 weeks.
The overall unemployment rate fell from 5.4% to 5.2%, but some demographic groups fared
better than others. Both men and women saw drops in their unemployment rates; the
unemployment rate for men declined to 5.1% from 5.4% in July, and women’s unemployment
rate ticked down to 5% from 5.2% in July. The unemployment rate for Whites fell from 4.8% to
4.5%, while the Black unemployment climbed from 8.2% to 8.8%. However, Black labor force
participation also increased by nearly a percentage point. The unemployment rate for Hispanics
dropped to 6.4% as the Asian unemployment rate declined to 4.6%, with an accompanying 0.4
percentage point drop in labor force participation. The unemployment rate for teenagers jumped
from 9.6% to 11.2% in August.
Most occupations have been impacted by the pandemic, and their recoveries continue.
Compared to a year ago, the unemployment rate broken down by occupation category is lower
across the board. However, some occupations saw upticks in their unemployment rates from
last month. At 7.5%, the unemployment rate among service occupations is 7.5 percentage
points lower than last August, although it is slightly higher than in July. The unemployment rate
for sales & office occupations ticked down from last month to 5.1% and is 2.7 percentage points
down from last August’s rate. Natural resources, construction, and maintenance occupations
saw their unemployment rate drop to 4.7%, down from 7.9% one year ago. Meanwhile, the
unemployment rate for transportation and materials is down 3.9 percentage points from last
year, currently standing at 8.2%.
After adding back jobs for 6 straight months, Leisure and Hospitality employment was
unchanged from July. The Delta variant has had a large impact on industries reliant on
face-to-face interactions. Employment in restaurants/bars, part of the Leisure and Hospitality
industry, and retail both declined in August.
Some industries did experience significant job gains. Professional and Business Services,
Transportation and Warehousing, Manufacturing, and Other Services gained a total of 201,000
jobs, accounting for about 86% of total job growth in August. Employment in Professional and
Business Services went up by 74,000 jobs, an increase of 2.5% from last month. While Leisure
and Hospitality employment stayed flat, other industries in addition to Retail
Trade—Construction, Health Care and Social Assistance, Government—also lost jobs.
One of the bright spots in August’s tepid jobs report was the increase in wages. Average hourly
wages increased for the 5th straight month and by the largest amount since April. Compared to
August of 2020, average hourly wages are 7.8% higher. Average hourly wages for Leisure and
Hospitality workers went up by $0.25, an increase of 1.35% from July. Wage growth for
non-managers, in particular, remains strong. In the Leisure and hospitality sector, non-manager
average hourly wages are now 16.7% higher from January 2019.
As the economy added 235,000 jobs, the labor force increased by 190,000 workers. While both
employment and the labor force increased from July, the increases are at a slower rate,
particularly for employment.
While the labor force participation rate was unchanged from July and remains 1.6 percentage
points lower than February’s 2020’s rate, the employment-to-population ratio, a broader gauge
of the strength of the job market, increased both overall and for prime-age workers. The
employment to population ratio increased from 58.4% to 58.5% for all workers and from 77.8%
to 78% for workers aged 25 to 54. While the pace of recovery has slowed due to Delta, these
increases are signs of resilience.
Although the number of unemployed persons looking for work currently stands at 8.4 million,
businesses across the country—especially restaurants, retailers, and hospitality
companies—report difficulty filling jobs. In July there were XX million job openings. While extra
unemployment benefits may have kept some workers from taking new jobs, the pandemic has
likely caused many workers to reevaluate their priorities and push for better pay, benefits, and
After several months of strong recovery, the U.S. job market reacted to the COVID-19 Delta
variant with disappointing job growth. The economy added just 235,000 jobs, a fraction of the
job gains from June and July. Despite this, there are some bright spots. The unemployment rate
fell to 5.2%, a new pandemic low. While employment in the hard-hit Leisure and Hospitality
industry stayed flat, wages in the industry continue to rise at a strong clip.
In the coming months, we will see the impact of school re-openings as well as the continued
impact of the COVID-19 Delta surge on the job market.
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